MyAV·¶ Laws academics submit response to FCA consultation on Senior Manager and Certification Regime
15 April 2019
'A Response to the Financial Conduct Authorityâs Consultation Paper CP19/4â outlines our disagreements with the FCAâs proposal on the Senior Manager and Certification Regime.
A team from the MyAV·¶ Centre for Ethics and Law (MyAV·¶ CEL) at MyAV·¶ Laws (Trevor Clark, Teaching Fellow; Professor Richard Moorhead, Chair of Law and Professional Ethics; Dr Steven Vaughan, Associate Professor; and Dr Alan Brener, Deputy Director of MyAV·¶ CEL) has submitted a response to the Financial Conduct Authorityâs consultation paper ('Optimising the Senior Managers & Certification Regimeâ).
The FCA proposes to exclude the head of the legal department of banks, insurance companies and other regulated firms from accountability under the Senior Manager and Certification Regime (SM&CR). In the response, the MyAV·¶ team outline their disagreements with the proposal, principally on public interest grounds, arguing that head of legal accountability under the SM&CR will promote effective risk management and help prevent wrongdoing within regulated firms.
The response challenges a number of the FCAâs assertions in CP19/4. For example, that the dominant function of in-house lawyers within regulated firms is as providers of narrow legal advice which does not constitute an âactivityâ for the purposes of SM&CR. The response highlights how this contention understates and misrepresents the importance of legal advice to regulated firms; the far wider range of activities undertaken by in-house lawyers in operationalising legal work within regulated firms; and the broad and operationally important role played by the head of legal and the legal function as a âline of defenceâ in regulated firms.
The response also highlights that the FCAâs apparent objective as reflected in CP10/4 of protecting legal professional privilege (LPP) in the context of regulatory investigations is in marked contrast to that of the Serious Fraud Office, which has publicly stated its concern that LPP may be used as a shield to mask wrongdoing.
The paper concludes by calling for the FCA to make the reasons for their policy choices proposed in CP19/4 clearer.
Contact
Professor Richard Moorhead, r.moorhead[at]ucl.ac.uk, 07963 612 005
Image: Financial Conduct Authority building,Ìý©ÌýFCA